How Uber and Lyft Are Buying Labor Laws

As usual in presidential years, the election night excitement in true-blue California will come not at the top of the ballot, where Democrats are all but assured victory, but from the state’s exhausting experiment with direct democracy. And nestled amongst this year’s 12 ballot measures on everything from taxes to voting rights to criminal justice to data privacy to health care sits perhaps the most consequential labor decision in decades.

Proposition 22 is simple. It carves out an exemption for app-based rideshare and delivery workers, allowing companies like Uber, Lyft, and DoorDash to continue misclassifying employees as independent contractors. This exempts those startups from paying minimum wage, carving a loophole in last year’s AB-5 law, which made many independent contractors and freelancers employees and conferred on them a handful of rights and protections. For those workers, it would mean no eligibility for state unemployment insurance, extremely curtailed worker protections, no overtime, no sick leave, no workplace discrimination protection, and no right to collectively bargain. In essence, it would formalize and enshrine an entirely new category of substandard employment for a class of workers that is made up overwhelmingly of people of color and immigrants. And it would do so permanently: The proposition states that any amendment to the regime would require an unprecedented seven-eighths majority vote in the state legislature.

In place of state labor laws, Prop 22 “guarantees” certain benefits, including completely undefined “assistance” with health care premiums and disability coverage for those injured on the job. To understand how inessential these benefits are, look only to the “minimum earnings” promise. Drivers are guaranteed an hourly wage at least 120 percent of the local minimum. But that only kicks in during time spent driving, while waiting for or getting to a ride or a delivery, which can be as much as 37 percent of the time spent on the job, remains uncompensated. When you factor in time on the clock that remains unpaid, the “guarantee” would yield a subminimum wage for most drivers. A UC Berkeley Labor Center study estimates the average wage under Prop 22 as low as $5.64 an hour, a drastic pay cut from the $13 minimum wage they would be guaranteed as employees.

Prop 22 has quickly become one of the most contentious political battles in the state. It’s also the most expensive ballot proposition, not just in California’s history, but in the entire history of the United States. Rideshare and delivery startups—Uber, Lyft, Postmates, Instacart, DoorDash—have contributed over $184 million so far to ensuring passage. No on 22, the campaign to uphold current employment law, has just over $10 million.

Part of the reason this has become such a pricey priority for Silicon Valley and its venture capital backers is the stakes of its passage. The business model of Uber and Lyft and its compatriots is predicated on the misclassification of their workforce as private contractors and the cheap, substandard labor protections that brings. For example, refusal to pay into the state’s unemployment insurance fund has saved Uber and Lyft a combined $413 million since 2014. Even with that advantage, those companies still don’t turn a profit, but forcing them to conform to labor standards would make their push for profitability potentially impossible. So the survivability as a business for these firms is tied directly to exploiting their workers […]

How Uber and Lyft Are Buying Labor Laws —

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